“Verizon finished 2017 with great momentum, led by some of the best customer growth and loyalty results Verizon Wireless has delivered in recent years,” said Chairman and CEO Lowell McAdam. “In 2018 we look to drive long-term shareholder value by deploying next-generation network services, leveraging global platforms such as Oath, and using our strategic Humanability approach to turn innovative ideas into realities.”

Tax-reform legislation will have a positive impact to cash flow from operations in 2018 of approximately $3.5 billion to $4 billion. The incremental cash flow will be used primarily to strengthen Verizon’s balance sheet. Additionally, Verizon will announce later today how employees will further share in the company’s success, and the company will also be increasing contributions to the Verizon Foundation by $200 million to $300 million over the next two years. These two initiatives have a projected EPS impact of 5 to 6 cents for each of the next two years.

Fourth-quarter 2017 adjusted EPS included a net pre-tax loss from special items of about $2.6 billion: a severance and mark-to-market adjustment of pension and OPEB (other post-employment benefits) liabilities of $1.2 billion dollars; early debt redemption costs of $681 million; a $671 million charge for product realignment of early-stage developmental technologies; acquisition and integration-related charges of $154 million; and a non-cash pre-tax gain on spectrum license transactions of about $144 million. As Verizon noted in an 8-K filing on Jan. 17, the federal Tax Cuts and Jobs Act also resulted in a one-time, after-tax increase to earnings provisionally estimated to be approximately $16.8 billion, or $4.10 per share. This is primarily related to the re-measurement of the company’s net deferred tax liabilities at the new corporate income tax rate.

The cumulative net impact from these items, after tax, was approximately $15.2 billion, or $3.71 per share, in fourth-quarter 2017.

For full-year 2017, Verizon reported $7.36 in EPS, compared with $3.21 in full-year 2016. On an adjusted basis (non-GAAP), 2017 EPS was $3.74, compared with 2016 EPS of $3.87.

In Verizon’s media business, Oath revenues were $2.2 billion in fourth-quarter 2017, up approximately 10 percent from third-quarter 2017, driven by increased customer advertising spending during the holidays. Verizon expects a normal seasonal trend in Oath revenues between fourth-quarter 2017 and first-quarter 2018.

In telematics, revenues were more than $230 million in fourth-quarter 2017. IoT (Internet of Things) revenues increased approximately 17 percent year over year, and 8 percent on an organic basis (non-GAAP).

Full-year 2017 postpaid net additions of 2.1 million included 1.8 million smartphones, Verizon’s highest total since 2015. It also included 31,000 tablets and 1.3 million other connected devices.

For the third consecutive quarter, Verizon increased customer accounts, adding 40,000 to its base in fourth-quarter 2017. The company ended 2017 with 116.3 million total retail connections -- 110.9 million postpaid connections and 5.4 million prepaid connections.

Total retail postpaid churn was 1.00 percent in fourth-quarter 2017, a year-over-year improvement of 10 basis points, driven mainly by retail postpaid phone churn of 0.77 percent. This is the 11th consecutive quarter of retail postpaid phone churn of less than 0.90 percent.

Total revenues were $23.8 billion in fourth-quarter 2017, an increase of 1.7 percent compared with fourth-quarter 2016 and the company’s first year-over-year wireless revenue growth in two years. The momentum in service revenue trends continued, increasing sequentially for the second consecutive quarter, to $15.9 billion, while the year-over-year decline improved to 2.9 percent. For full-year 2017, total revenues totaled $87.5 billion, a decline of 1.9 percent.

Verizon now has approximately 80 percent of its postpaid phone base on unsubsidized service pricing plans, compared with approximately 67 percent at year-end 2016.

Segment operating income in fourth-quarter 2017 was $7.1 billion, and segment operating income margin on total revenues was 29.9 percent. Segment EBITDA (non-GAAP) totaled $9.5 billion in fourth-quarter 2017. Segment EBITDA margin on total revenues (non-GAAP) was 39.8 percent, compared with 36.9 percent in fourth-quarter 2016.

Wireline results

Total wireline revenues increased 0.1 percent year over year in fourth-quarter 2017 and 0.6 percent for the full year, compared with 2016, to $7.6 billion and $30.7 billion, respectively. On an organic basis, excluding revenues from acquired operations (non-GAAP), total wireline revenues declined 3.6 percent year over year in fourth-quarter 2017.

In fourth-quarter 2017, Verizon added a net of 47,000 Fios Internet connections and lost a net of 29,000 Fios Video connections, continuing to reflect the shift from traditional linear video to over-the-top offerings. At year-end 2017, Verizon had 5.9 million Fios Internet connections and 4.6 million Fios Video connections.

Wireline operating income was $62 million in fourth-quarter 2017, and segment operating income margin was 0.8 percent. Full-year 2017 segment operating income was $380 million, and segment operating income margin was 1.2 percent.

Segment EBITDA (non-GAAP) was $1.6 billion in fourth-quarter 2017. Segment EBITDA margin (non-GAAP) was 20.9 percent in fourth-quarter 2017, compared with 23.3 percent in fourth-quarter 2016. For the full year, segment EBITDA margin was 21.1 percent in 2017, compared with 18.6 percent in 2016 (which included impacts from a work stoppage).

Outlook and guidance

For 2018, Verizon expects the following:

Full-year consolidated revenues will grow at low-single-digit percentage rates on a GAAP basis. Excluding the impact from the new revenue recognition standard, Verizon is on track to achieve year-over-year wireless service revenue growth by the middle part of 2018. On a GAAP basis, Verizon expects service revenue growth to turn positive around the end of 2018 or early 2019.

Low single-digit percentage growth in adjusted EPS, which includes the dilutive impacts from a full year of depreciation and amortization costs from 2017 acquisitions, the Straight Path acquisition expected to close later in the first quarter, and the ongoing impact of last year’s data center divestitures. This is before the impact of tax reform and the revenue recognition standard.

Capital spending for 2018 will be in the range of $17.0 billion to $17.8 billion, including the commercial launch of 5G.

The expected savings from tax reform will generate a net $3.5 billion to $4.0 billion uplift to cash flow from operations in 2018. This is expected to yield a 55 to 65 cent increase in 2018 EPS, net of impacts from the employee and Verizon Foundation initiatives. The resulting 2018 effective tax rate is projected to be in the range of 24 to 26 percent.

NOTE: See the accompanying schedules and www.verizon.com/about/investors for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York City, generated $126 billion in 2017 revenues. The company operates America’s most reliable wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. Its Oath subsidiary reaches about one billion people around the world with a dynamic house of media and technology brands.

Forward-looking statementsIn this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.

Verizon Communications Inc.

Condensed Consolidated Statements of Income

(dollars in millions, except per share amounts)

3 Mos. Ended

3 Mos. Ended

12 Mos. Ended

12 Mos. Ended

Unaudited

12/31/17

12/31/16

% Change

12/31/17

12/31/16

% Change

Operating Revenues

Service revenues and other

$

27,480

$

26,610

3.3

$

107,145

$

108,468

(1.2

)

Wireless equipment revenues

6,475

5,730

13.0

18,889

17,512

7.9

Total Operating Revenues

33,955

32,340

5.0

126,034

125,980

—

Operating Expenses

Cost of services

7,836

7,006

11.8

29,409

29,186

0.8

Wireless cost of equipment

7,339

7,356

(0.2

)

22,147

22,238

(0.4

)

Selling, general and administrative expense

9,531

5,968

59.7

30,110

31,569

(4.6

)

Depreciation and amortization expense

4,456

3,987

11.8

16,954

15,928

6.4

Total Operating Expenses

29,162

24,317

19.9

98,620

98,921

(0.3

)

Operating Income

4,793

8,023

(40.3

)

27,414

27,059

1.3

Equity in losses of unconsolidated businesses

(6

)

(35

)

82.9

(77

)

(98

)

21.4

Other income (expense), net

(634

)

98

*

(2,010

)

(1,599

)

(25.7

)

Interest expense

(1,219

)

(1,137

)

(7.2

)

(4,733

)

(4,376

)

(8.2

)

Income Before Provision for Income Taxes

2,934

6,949

(57.8

)

20,594

20,986

(1.9

)

Benefit (provision) for income taxes

15,849

(2,349

)

*

9,956

(7,378

)

*

Net Income

$

18,783

$

4,600

*

$

30,550

$

13,608

*

Net income attributable to noncontrolling interests

$

114

$

105

8.6

$

449

$

481

(6.7

)

Net income attributable to Verizon

18,669

4,495

*

30,101

13,127

*

Net Income

$

18,783

$

4,600

*

$

30,550

$

13,608

*

Basic Earnings per Common Share

Net income attributable to Verizon

$

4.57

$

1.10

*

$

7.37

$

3.22

*

Weighted average number of common shares (in millions)

4,087

4,081

4,084

4,080

Diluted Earnings per Common Share (1)

Net income attributable to Verizon

$

4.56

$

1.10

*

$

7.36

$

3.21

*

Weighted average number of common

shares-assuming dilution (in millions)

4,090

4,087

4,089

4,086

Footnotes:

(1

)

Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution.

*

Not meaningful

Verizon Communications Inc.

Condensed Consolidated Balance Sheets

(dollars in millions)

Unaudited

12/31/17

12/31/16

$ Change

Assets

Current assets

Cash and cash equivalents

$

2,079

$

2,880

$

(801

)

Accounts receivable, net

23,493

17,513

5,980

Inventories

1,034

1,202

(168

)

Assets held for sale

—

882

(882

)

Prepaid expenses and other

3,307

3,918

(611

)

Total current assets

29,913

26,395

3,518

Property, plant and equipment

246,498

232,215

14,283

Less accumulated depreciation

157,930

147,464

10,466

Property, plant and equipment, net

88,568

84,751

3,817

Investments in unconsolidated businesses

1,039

1,110

(71

)

Wireless licenses

88,417

86,673

1,744

Goodwill

29,172

27,205

1,967

Other intangible assets, net

10,247

8,897

1,350

Non-current assets held for sale

—

613

(613

)

Other assets

9,787

8,536

1,251

Total Assets

$

257,143

$

244,180

$

12,963

Liabilities and Equity

Current liabilities

Debt maturing within one year

$

3,453

$

2,645

$

808

Accounts payable and accrued liabilities

21,232

19,593

1,639

Other

8,352

8,102

250

Total current liabilities

33,037

30,340

2,697

Long-term debt

113,642

105,433

8,209

Employee benefit obligations

22,112

26,166

(4,054

)

Deferred income taxes

31,232

45,964

(14,732

)

Other liabilities

12,433

12,245

188

Total long-term liabilities

179,419

189,808

(10,389

)

Equity

Common stock

424

424

—

Additional paid in capital

11,101

11,182

(81

)

Retained earnings

35,635

15,059

20,576

Accumulated other comprehensive income

2,659

2,673

(14

)

Common stock in treasury, at cost

(7,139

)

(7,263

)

124

Deferred compensation – employee

stock ownership plans and other

416

449

(33

)

Noncontrolling interests

1,591

1,508

83

Total equity

44,687

24,032

20,655

Total Liabilities and Equity

$

257,143

$

244,180

$

12,963

Verizon - Selected Financial and Operating Statistics

Unaudited

12/31/17

12/31/16

Total debt (in millions)

$

117,095

$

108,078

Net debt (in millions)

$

115,016

$

105,198

Net debt / Consolidated adjusted EBITDA(1)

2.6x

2.4x

Common shares outstanding end of period (in millions)

4,079

4,077

Total employees (‘000)

155.4

160.9

Quarterly cash dividends declared per common share

$

0.5900

$

0.5775

Footnotes:

(1) Consolidated adjusted EBITDA excludes the effects of special items and operating results of Divested Businesses, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Verizon Communications Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in millions)

12 Mos. Ended

12 Mos. Ended

Unaudited

12/31/17

12/31/16

$ Change

Cash Flows from Operating Activities

Net Income

$

30,550

$

13,608

$

16,942

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization expense

16,954

15,928

1,026

Employee retirement benefits

440

2,705

(2,265

)

Deferred income taxes

(14,463

)

(1,063

)

(13,400

)

Provision for uncollectible accounts

1,167

1,420

(253

)

Equity in losses of unconsolidated businesses, net of dividends received

117

138

(21

)

Changes in current assets and liabilities, net of effects from

acquisition/disposition of businesses

(4,947

)

(5,636

)

689

Discretionary contribution to qualified pension plans

(3,411

)

(186

)

(3,225

)

Net gain on sale of divested businesses

(1,774

)

(1,007

)

(767

)

Other, net

672

(3,097

)

3,769

Net cash provided by operating activities

25,305

22,810

2,495

Cash Flows from Investing Activities

Capital expenditures (including capitalized software)

(17,247

)

(17,059

)

(188

)

Acquisitions of businesses, net of cash acquired

(5,928

)

(3,765

)

(2,163

)

Acquisitions of wireless licenses

(583

)

(534

)

(49

)

Proceeds from dispositions of businesses

3,614

9,882

(6,268

)

Other, net

772

493

279

Net cash used in investing activities

(19,372

)

(10,983

)

(8,389

)

Cash Flows from Financing Activities

Proceeds from long-term borrowings

27,707

12,964

14,743

Proceeds from asset-backed long-term borrowings

4,290

4,986

(696

)

Repayments of long-term borrowings and capital lease obligations

(23,837

)

(19,159

)

(4,678

)

Repayments of asset-backed long-term borrowings

(400

)

—

(400

)

Decrease in short-term obligations, excluding current maturities

(170

)

(149

)

(21

)

Dividends paid

(9,472

)

(9,262

)

(210

)

Other, net

(4,852

)

(2,797

)

(2,055

)

Net cash used in financing activities

(6,734

)

(13,417

)

6,683

Decrease in cash and cash equivalents

(801

)

(1,590

)

789

Cash and cash equivalents, beginning of period

2,880

4,470

(1,590

)

Cash and cash equivalents, end of period

$

2,079

$

2,880

$

(801

)

Footnotes:

Certain amounts have been reclassified to conform to the current period presentation.

Verizon Communications Inc.

Wireless - Selected Financial Results

(dollars in millions)

3 Mos. Ended

3 Mos. Ended

12 Mos. Ended

12 Mos. Ended

Unaudited

12/31/17

12/31/16

% Change

12/31/17

12/31/16

% Change

Operating Revenues

Service

$

15,880

$

16,346

(2.9

)

$

63,121

$

66,580

(5.2

)

Equipment

6,475

5,733

12.9

18,889

17,515

7.8

Other

1,416

1,298

9.1

5,501

5,091

8.1

Total Operating Revenues

23,771

23,377

1.7

87,511

89,186

(1.9

)

Operating Expenses

Cost of services

1,983

2,056

(3.6

)

7,990

7,988

—

Cost of equipment

7,339

7,356

(0.2

)

22,147

22,238

(0.4

)

Selling, general and administrative expense

4,987

5,335

(6.5

)

18,772

19,924

(5.8

)

Depreciation and amortization expense

2,344

2,321

1.0

9,395

9,183

2.3

Total Operating Expenses

16,653

17,068

(2.4

)

58,304

59,333

(1.7

)

Operating Income

$

7,118

$

6,309

12.8

$

29,207

$

29,853

(2.2

)

Operating Income Margin

29.9

%

27.0

%

33.4

%

33.5

%

Segment EBITDA

$

9,462

$

8,630

9.6

$

38,602

$

39,036

(1.1

)

Segment EBITDA Margin

39.8

%

36.9

%

44.1

%

43.8

%

Footnotes:

The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Verizon Communications Inc.

Wireless - Selected Operating Statistics

Unaudited

12/31/17

12/31/16

% Change

Connections (‘000)

Retail postpaid

110,854

108,796

1.9

Retail prepaid

5,403

5,447

(0.8

)

Total retail

116,257

114,243

1.8

3 Mos. Ended

3 Mos. Ended

12 Mos. Ended

12 Mos. Ended

Unaudited

12/31/17

12/31/16

% Change

12/31/17

12/31/16

% Change

Net Add Detail (‘000) (1)

Retail postpaid

1,174

591

98.6

2,084

2,288

(8.9

)

Retail prepaid

(184

)

(9

)

*

(43

)

(133

)

67.7

Total retail

990

582

70.1

2,041

2,155

(5.3

)

Account Statistics

Retail Postpaid Accounts (‘000) (2)

35,404

35,410

—

Retail postpaid connections per account (2)

3.13

3.07

2.0

Retail postpaid ARPA (3)

$

135.78

$

141.89

(4.3

)

$

135.99

$

144.32

(5.8

)

Retail postpaid I-ARPA (4)

$

167.19

$

169.10

(1.1

)

$

166.28

$

167.70

(0.8

)

Churn Detail

Retail postpaid

1.00

%

1.10

%

1.01

%

1.01

%

Retail

1.24

%

1.34

%

1.25

%

1.26

%

Retail Postpaid Connection Statistics

Total Smartphone postpaid % of phones activated

96.7

%

95.2

%

95.4

%

93.4

%

Total Smartphone postpaid phone base (2)

90.1

%

87.3

%

Total Internet postpaid base (2)

19.0

%

18.3

%

4G LTE devices as % of retail postpaid connections

88.3

%

85.0

%

Other Operating Statistics

Capital expenditures (in millions)

$

3,383

$

3,464

(2.3

)

$

10,310

$

11,240

(8.3

)

Footnotes:

(1

)

Connection net additions exclude acquisitions and adjustments.

(2

)

Statistics presented as of end of period.

(3

)

Retail postpaid ARPA - average service revenue per account from retail postpaid accounts.

The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

*

Not meaningful

Verizon Communications Inc.

Wireline - Selected Financial Results

(dollars in millions)

3 Mos. Ended

3 Mos. Ended

12 Mos. Ended

12 Mos. Ended

Unaudited

12/31/17

12/31/16

% Change

12/31/17

12/31/16

% Change

Operating Revenues

Consumer Markets

$

3,188

$

3,232

(1.4

)

$

12,777

$

12,751

0.2

Enterprise Solutions

2,285

2,276

0.4

9,167

9,164

—

Partner Solutions

1,209

1,205

0.3

4,917

4,927

(0.2

)

Business Markets

885

822

7.7

3,585

3,356

6.8

Other

50

72

(30.6

)

234

312

(25.0

)

Total Operating Revenues

7,617

7,607

0.1

30,680

30,510

0.6

Operating Expenses

Cost of services

4,465

4,357

2.5

17,922

18,353

(2.3

)

Selling, general and administrative expense

1,558

1,478

5.4

6,274

6,476

(3.1

)

Depreciation and amortization expense

1,532

1,435

6.8

6,104

5,975

2.2

Total Operating Expenses

7,555

7,270

3.9

30,300

30,804

(1.6

)

Operating Income (Loss)

$

62

$

337

(81.6

)

$

380

$

(294

)

*

Operating Income (Loss) Margin

0.8

%

4.4

%

1.2

%

(1.0

)%

Segment EBITDA

$

1,594

$

1,772

(10.0

)

$

6,484

$

5,681

14.1

Segment EBITDA Margin

20.9

%

23.3

%

21.1

%

18.6

%

Footnotes:

The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Certain amounts have been reclassified to conform to the current period presentation.

*

Not meaningful

Verizon Communications Inc.

Wireline - Selected Operating Statistics

Unaudited

12/31/17

12/31/16

% Change

Connections (‘000)

Fios Video Subscribers

4,619

4,694

(1.6

)

Fios Internet Subscribers

5,850

5,653

3.5

Fios Digital voice residence connections

3,905

3,895

0.3

Fios Digital connections

14,374

14,242

0.9

HSI

1,109

1,385

(19.9

)

Total Broadband connections

6,959

7,038

(1.1

)

Primary residence switched access connections

2,708

3,230

(16.2

)

Primary residence connections

6,613

7,125

(7.2

)

Total retail residence voice connections

6,804

7,355

(7.5

)

Total voice connections

12,821

13,939

(8.0

)

3 Mos. Ended

3 Mos. Ended

12 Mos. Ended

12 Mos. Ended

Unaudited

12/31/17

12/31/16

% Change

12/31/17

12/31/16

% Change

Net Add Detail (‘000)

Fios Video Subscribers

(29

)

21

*

(75

)

59

*

Fios Internet Subscribers

47

68

(30.9

)

197

235

(16.2

)

Fios Digital voice residence connections

(15

)

13

*

10

23

(56.5

)

Fios Digital connections

3

102

(97.1

)

132

317

(58.4

)

HSI

(66

)

(68

)

2.9

(276

)

(282

)

2.1

Total Broadband connections

(19

)

-

*

(79

)

(47

)

(68.1

)

Primary residence switched access connections

(122

)

(129

)

5.4

(522

)

(569

)

8.3

Primary residence connections

(137

)

(116

)

(18.1

)

(512

)

(546

)

6.2

Total retail residence voice connections

(146

)

(127

)

(15.0

)

(551

)

(594

)

7.2

Total voice connections

(279

)

(255

)

(9.4

)

(1,118

)

(1,096

)

(2.0

)

Revenue Statistics

Fios revenues (in millions)

$

2,959

$

2,892

2.3

$

11,691

$

11,236

4.0

Other Operating Statistics

Capital expenditures (in millions)

$

1,981

$

1,648

20.2

$

5,339

$

4,504

18.5

Wireline employees (‘000)

57.1

57.6

Fios Video Open for Sale (‘000)

14,287

13,693

Fios Video penetration

32.3

%

34.3

%

Fios Internet Open for Sale (‘000)

14,582

13,982

Fios Internet penetration

40.1

%

40.4

%

Footnotes:

The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Certain amounts have been reclassified to conform to the current period presentation.

Newswire Distribution Network & Management

About Us

GlobeNewswire is one of the world's largest newswire distribution networks, specializing in the delivery of corporate press releases financial disclosures and multimedia content to the media, investment community, individual investors and the general public.